Catahoula Re Pte. Ltd. (Series 2020-1)

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Catahoula Re Pte. Ltd. (Series 2020-1) – At a glance:

  • Issuer: Catahoula Re Pte. Ltd.
  • Cedent / sponsor: Louisiana Citizens Property Insurance Corporation
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Louisiana named storm & severe thunderstorm
  • Size: $60m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: May 2020

Catahoula Re Pte. Ltd. (Series 2020-1) – Full details:

This is the sixth catastrophe bond issuance to be sponsored by Louisiana Citizens Property Insurance Corporation and the first under a new Singapore domiciled special purpose reinsurance vehicle named Catahoula Re Pte. Ltd.

With this new Catahoula Re Pte. Ltd. Series 2020-1 catastrophe bond transaction, Louisiana Citizens is seeking to expand the capital markets backed reinsurance coverage it has from the cat bond market, to add to still in-force protection from its last Pelican Re cat bond deal that was issued in 2018.

Catahoula Re Pte. Ltd. has been registered in Singapore as a special purpose reinsurance vehicle (SPRV), we’re told, as Louisiana Citizens shifts its normal domicile of choice to the country.

For 2020 Louisiana Citizens is looking to expand its capital markets backed reinsurance coverage for the catastrophe perils of Louisiana named storms (so tropical cyclones and hurricanes) as well as severe thunderstorms.

It’s the second transaction where LA Citizens has sought reinsurance coverage for the two perils and we’re told this new Catahoula Re cat bond will sit directly below the Pelican IV Re 2018 cat bond it the insurers reinsurance tower.

Catahoula Re Pte. Ltd. will seek to issue a single tranche of Series 2020-1 catastrophe bond notes that will be sold to investors and the proceeds used to fund and collateralise a reinsurance agreement to provide the coverage.

For now, the Series 2020-1 Class A notes are targeting just a $50 million issuance, although that could certainly grow if investor demand allows, we understand.

The notes will provide LA Citizens with per-occurrence and indemnity trigger based reinsurance cover for named storm and severe thunderstorm risks across a three-year term.

We’re told the notes will attach at $260 million of losses and exhaust at $360 million, so covering a $100 million layer and providing room to upsize if investor demand is sufficient to support it.

The notes will have an initial expected loss of 0.91% at the base case, we’re told, which translates to them being offered to cat bond investors with a coupon of 3% to 3.5%.

Update 1:

The Catahoula Re Pte. Ltd. Series 2020-1 catastrophe bond transaction, sponsored by Louisiana Citizens, has upsized by 20% to become an offering of $60 million of notes.

At the same time the pricing settled at the upper-end of guidance, to provide investors in the notes a coupon of 3.5%.

Update – November 2021:

The Catahoula Re Pte. Ltd. Series 2020-1 catastrophe bond is expected to be a total loss following hurricane Ida, as Louisiana Citizens anticipates making a full reinsurance recovery from it.

Update – May 2022:

The full recovery has yet to be made, but Louisiana Citizens has confirmed it is expected and the market still has these notes marked down for a total loss.

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